Travellers cheques have been used around the world for over 100 years. In the United States alone, more than $25 billion dollars are spent each year by consumers purchasing travellers cheques.
A travellers cheque is typically issued for a particular country in that country's currency. For example, a travellers cheque issued for use in the United States would typically be issued bearing a "USA" or "United States" designation and issued in denominations of $20, $50, $100, and the like. Similarly, travellers cheques issued for use in other countries would carry that country's designation and be issued in convenient round denominations of that country's currency.
Travellers cheques are intended to be signed by the purchaser at the time of purchase, for example on the front of the travellers cheque. When the purchaser desires to use the travellers cheque at a later time to pay for goods or services, the consumer again signs the travellers cheque so that the merchant accepting the travellers cheque can compare the two signatures. If the two signatures match, the merchant may presume that the person cashing the travellers cheque was the same person who purchased the travellers cheque. However, if the signatures do not match, the merchant may refuse the travellers cheques, reasoning that any sufficient lack of correspondence between the two signatures suggests that the person attempting to use the travellers cheque is not the rightful owner.
The popularity of travellers cheques is in large measure due to the ease with which refunds may be obtained in the event the cheques are lost or stolen. Typically, travellers cheques are purchased in a preassembled booklet which includes the travellers cheque or cheques and a purchase agreement sometimes referred to as a Purchase Agreement Form (PAF). In particular, the PAF sets forth the procedures for obtaining a refund or replacement for lost or stolen travellers cheques.
In order to obtain a refund for lost or stolen travellers cheques, a purchaser must generally satisfy, in some measure, a number of "before loss" requirements and a number of "after loss" requirements. Typical before loss requirements include: (i) the travelers cheque must be signed at or near the time of purchase by the purchaser; (ii) the travellers cheques must not have been countersigned (i.e. signed a second time) by the purchaser, which should only be performed at the time the cheques are cashed; (iii) the cheque has not been given to another person voluntarily; (iv) the cheque has not been used in violation of law; and (v) the cheque has not been seized by a court or government action. Typical after loss requirements include: (i) immediate notification to the issuer of the loss or theft of the cheque; (ii) informing the issuer of all relevant facts surrounding the loss or theft of the cheque and informing the police if asked to do so by the issuer; (iii) completion of appropriate refund forms in due course; (iv) assisting the issuer in any investigation; and perhaps most importantly, (v) the consumer seeking a refund or replacement must be able to identify the cheques, for example by informing the issuer of the serial numbers of the lost cheques.
The greatest difficulty in complying with the foregoing requirements generally surrounds the consumer's ability to report the serial numbers of the stolen travellers cheques. Although some prepackaged travellers cheque booklets provide a convenient place to record serial numbers, the average person's tendency is to retain the list of serial numbers in the booklet with the travellers cheques. Hence, if the travellers cheques are lost or stolen, the list of serial numbers is typically lost or stolen as well. A substantial percentage of travellers cheque purchasers simply do not record the serial numbers on a separate piece of paper and maintain that document separate and apart from the travellers cheques in a manner which provides ready access to the serial numbers when they are needed to report a loss.
If a consumer is unable to identify the serial numbers of lost or stolen travellers cheques, many issuers will deny a refund or replacement unless alternate evidence of a convincing nature is supplied tending to prove that the cheques were in fact lost or stolen. However, customer relations issues arise when the truthfulness of the consumer's assertion that his travellers cheques had been lost or stolen is questioned.
An alternate strategy is to provide refunds or replacements even if a consumer is unable to recite the serial numbers of the lost cheques. While this enhances customer relations and facilitates good will for the issuer, the resulting fraud and abuse is concomitantly high.
A system and method is thus needed which overcomes the shortcomings of refunding and replacing lost or stolen travelers cheques.